Decision due: Wednesday 16 September, 18:30 -03 · Current Selic rate: 14.0%
1. Executive summary
Brazil's Banco Central do Brasil is expected to cut the Selic rate by 25 basis points at this meeting. The single most important driver is the further decline in IPCA and IPCA-15 measures since the 5 August decision, which have surprised to the downside and reinforce the case for continued calibration of the restrictive stance. The key risk is that the surge in oil prices, combined with 2026 inflation expectations still at 4.9% in the Focus survey, could lead the committee to pause if it perceives risks to de-anchoring as having intensified.
2. The call
Surveyed economist consensus and the Focus survey median are for a 25bp cut to 13.75% at Wednesday's decision. The call aligns with that view and expects the Copom to deliver another 25bp reduction, taking the Selic rate to 13.75%. This would extend the calibration cycle that began in March with a cut from 15.00% to 14.75% and has so far proceeded in 25bp increments. The 5 August decision cut the rate to 14.0% with a unanimous 7-0 vote and framed policy as remaining adequately restrictive while the size of any remaining easing would be data-dependent to ensure convergence. A hold cannot be ruled out if the statement places heavier weight on the oil spike and the gap between actual and expected inflation, but the recent prints and the committee's own August characterisation of activity as moderating gradually argue for continuity.
3. The committee
The Copom Lean column is derived from each member's attributed voting record in the minutes, not from speeches. Only dissents differentiate members — a member who has always voted with the majority has revealed no individual stance.
| Member | Role | Lean | Last vote |
|---|---|---|---|
| Gabriel Muricca Galípolo | Governor | Dovish dissent | Voted -25bp (Aug) |
| Izabela Moreira Correa | Deputy Governor for Citizenship and Conduct Supervision | Aligned — no recorded dissent | Voted -25bp (Aug) |
| Nilton José Schneider David | Deputy Governor for Monetary Policy | Aligned — no recorded dissent | Voted -25bp (Aug) |
| Paulo Picchetti | Deputy Governor for International Affairs and Corporate Risk Management (also Economic Policy) | Dovish dissent | Voted -25bp (Aug) |
| Ailton de Aquino Santos | Deputy Governor for Supervision | Dovish dissent | Voted -25bp (Aug) |
| Rodrigo Alves Teixeira | Deputy Governor for Administration | Dovish dissent | Voted -25bp (Aug) |
| Gilneu Francisco Astolfi Vivan | Deputy Governor for Regulation (also Financial System Organization and Resolution) | Aligned — no recorded dissent | Voted -25bp (Aug) |
The committee has maintained unanimity among those present through the four 25bp cuts delivered in 2026, with every voting member backing the moves from 14.75% in March through to 14.0% in August. The lean column, drawn from the full voting record rather than speeches, flags the Governor, Ailton de Aquino Santos and Rodrigo Alves Teixeira as having dovish dissents and Paulo Picchetti as having a dovish dissent during the 2024 hiking cycle; those differences have not surfaced in the 2026 unanimous outcomes. With the Copom publishing named votes in the minutes, any shift away from consensus at this meeting would be immediately visible and would likely centre on the balance between declining actual inflation and still-elevated expectations. The August statement's emphasis on upside risks suggests the chair will continue to set a cautious tone even while easing.
4. Data since the last decision
| Indicator | Latest | Consensus | Surprise | Prior | Δ |
|---|---|---|---|---|---|
| IPCA inflation (YoY) | 4.22% (Aug, rel. 11 Sep) | 4.27% | -0.05pp | 4.44% (Jul) | -0.22pp |
| IPCA-15 mid-month CPI (YoY) | 4.24% (Aug, rel. 26 Aug) | 4.34% | -0.10pp | 4.52% (Jul) | -0.28pp |
| IPCA-15 mid-month CPI (MoM) | -0.40% (Aug, rel. 26 Aug) | -0.30% | -0.10pp | 0.06% (Jul) | -0.46pp |
| IGP-M inflation (MoM) | -0.22% (Aug, rel. 28 Aug) | -0.25% | +0.03pp | -1.16% (Jul) | +0.94pp |
| Real GDP growth (YoY) | 2.0% (Q2, rel. 01 Sep) | 1.8% | +0.2pp | 1.8% (Q1) | +0.2pp |
| Real GDP growth (QoQ) | 0.5% (Q2, rel. 01 Sep) | 0.4% | +0.1pp | 1.1% (Q1) | -0.6pp |
| Unemployment rate | 5.3% (Jul, rel. 27 Aug) | 5.3% | +0.0pp | 5.4% (Jun) | -0.1pp |
| Formal job creation (CAGED) | 58.6k (Jul, rel. 28 Aug) | 112.0k | -53.4k | 145.2k (Jun) | -86.6k |
| Manufacturing PMI | 46.3 (Aug, rel. 01 Sep) | — | — | 47.5 (Jul) | -1.2pt |
| Services PMI | 50.5 (Aug, rel. 03 Sep) | — | — | 49.7 (Jul) | +0.8pt |
| FGV consumer confidence | 84.7 (Aug, rel. 25 Aug) | — | — | 88.3 (Jul) | -3.6pt |
| Business confidence | 44.9 (Sep, rel. 14 Sep) | — | — | 46.3 (Aug) | -1.4pt |
| Industrial production (YoY) | -0.5% (Jul, rel. 02 Sep) | — | — | 1.7% (Jun) | -2.2pp |
| Retail sales (YoY) | 1.2% (Jul, rel. 15 Sep) | 2.2% | -1.0pp | 2.9% (Jun) | -1.7pp |
| Trade balance | 7.4bn USD (Aug, rel. 04 Sep) | 7.1bn USD | +0.2bn | 7.1bn USD (Jul) | +0.3bn |
| USD/BRL (daily close) | 5.15 (15 Sep) | — | — | 5.12 (05 Aug) | +0.6% |
| WTI crude oil (USD/bbl) | 101.89 (14 Sep) | — | — | 75.22 (05 Aug) | +35.5% |
| 5Y government yield | 14.22% (10 Sep) | — | — | 14.22% (05 Aug) | +0bp |
| 10Y government yield | 14.33% (10 Sep) | — | — | 14.41% (05 Aug) | -8bp |
Market rows are measured from the 05 Aug close — the last observation common to every market series on or before the last decision.
Inflation prints since the 5 August decision have eased and surprised to the downside on both headline and mid-month measures, with IPCA falling 0.22pp to 4.22% in August and IPCA-15 dropping 0.28pp to 4.24%. The August IGP-M reading was slightly firmer than expected but remained negative. Activity data are more mixed: Q2 GDP beat consensus on both annual and quarterly bases, retail sales surprised negatively, and the trade balance widened, yet industrial production fell sharply, manufacturing PMI moved deeper into contraction, and consumer confidence declined. The labour market remains tight at 5.3% unemployment, but formal job creation missed expectations badly and slowed markedly from June. The currency has weakened modestly while oil prices have risen 35.5% to 101.89, with WTI crude oil (USD/bbl) reaching its window high of 101.89 on 14 September; government yields were little changed.
These prints point to headline IPCA at 4.22% and IPCA-15 at 4.24% (both above the 3.0% target but below the 4.5% ceiling), while Focus expectations for 2026 stand at 4.9% (above the ceiling). Momentum appears to be turning in the right direction even after the oil spike. Activity is moderating gradually while remaining resilient, consistent with the August statement, and the output gap is unlikely to be adding material pressure given the softening in job creation and PMI readings. The labour market shows limited slack but the sharp drop in net payrolls is the first clear easing signal in several months. IPCA and the Focus survey median remain the decisive inputs; the inflation trajectory, rather than the current level or labour-market tightness, is doing the main work in supporting another cut.
5. What the committee has said
Committee-member speeches published since the last decision. Dates are publication dates.
“The Central Bank's two reports converge: the same expensive, unsecured credit lines explain both the rise in household indebtedness and the rise in household delinquency.”
“Household indebtedness continues to rise, pressured by the growth of credit cards and unsecured personal loans.”
“The growth of credit card–related indebtedness is more concerning than the rise in housing credit”
The August statement recorded a slightly less dovish tone than the June and April versions while retaining the same core message: headline and core inflation have eased but remain near or above the upper target bound, with 2026-27 expectations significantly de-anchored and Q1-2028 projection at 3.2%. Growth was characterised as moderating gradually while still resilient, with a tight labour market and mixed sectoral signals. Forward guidance stressed that the size of the remaining easing cycle would be data-dependent to ensure convergence, with policy kept adequately restrictive amid high uncertainty. Risks were judged larger than usual and asymmetrically tilted to the upside, dominated by de-anchoring, services inertia, and fiscal or external shocks. The statement therefore surrounded the 25bp cut with unusually strong upside warnings, signalling caution rather than a pre-set easing path.
The presentation by Governor Galípolo published on 24 August contained no explicit reference to the Selic rate but devoted extended attention to rising household indebtedness, expensive unsecured credit lines, and growing delinquencies, citing the Monetary Policy Report. The framing tilts toward concern about the credit cycle and household financial stress even as the easing cycle proceeds. Earlier statements from June and April similarly highlighted de-anchored expectations and elevated uncertainty while continuing the calibration cycle at a data-dependent pace. The committee's communications therefore continue to place heavier weight on inflation risks than on the softening activity signals, suggesting Wednesday's statement is likely to acknowledge the improved IPCA prints without removing the cautionary language around expectations and external shocks.
6. Scenarios
| Scenario | Trigger | Rate path |
|---|---|---|
| Base case | Inflation continues to ease in line with recent IPCA and IPCA-15 surprises, Focus expectations do not deteriorate further | 25bp cut to 13.75% at this meeting, aligning with the Focus median for year-end 2026 at 13.75% |
| Upside inflation risk | Oil-driven pass-through or fresh de-anchoring in the next Focus round leads the statement to emphasise upside risks more forcefully | Hold at 14.0%, with minutes signalling that the calibration cycle could pause until clearer evidence of convergence emerges |
| Faster easing | Labour-market softening accelerates and Q3 activity prints confirm the GDP slowdown, outweighing the oil spike | 50bp cut to 13.5%, though this would represent a clear departure from the 25bp increments used so far in 2026 |
7. Into the meeting
The statement is likely to note the further decline in IPCA while reiterating that expectations remain de-anchored and that risks are tilted to the upside, preserving the August language of adequate restrictiveness and data dependence. With no press conference, the communiqué and the minutes published on 22 September will be the sole vehicles for any nuance on the oil shock or the labour-market signals. The Sep IPCA Mid-Month Consumer Price Index Month-over-Month on 25 September and the Sep Inflation Rate Year-over-Year on 9 October will arrive before the next meeting on 4 November and will therefore shape the immediate market reaction. The Focus survey will also be watched closely for any shift in 2026 expectations.
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